Wall Street Pulls Off Stunning Comeback

Dow Gains Almost 300 Points After Earlier 320-Point Drop; Stimulus Plan Negotiated On The Hill

(CBS/AP)  Wall Street pulled off a stunning comeback Wednesday, surging higher in late trading and wiping out what looked to be yet another precipitous decline. The Dow Jones industrials, down more than 323 points in earlier trading, ended the day with an advance of just under 300 points, according to preliminary calculations.

While such volatility has become a hallmark of Wall Street's performance in recent months amid the ongoing housing and credit crisis, analysts saw some positive signs in the day's trading.

"There does come a point and time when the market itself recognizes that it got out of hand, and that is when bargain-hunters can come in," said Peter Cardillo, chief market economist at Avalon Partners.

Recession worries continued to make the markets highly volatile.

"I refer to the economy like a 'cat on a hot tin roof.' That it's used up 8 of its 9 lives. Meaning if it falls, it's not gonna land on its feet," Stuart Hoffman, an economist at PNC Bank, told CBS News correspondent Anthony Mason.

Merrill Lynch offered a bleaker outlook, predicting "the worst consumer recession since 1980" and forecasting that house prices could fall 15 percent this year and another 10 percent in 2009, reports Mason.

The Fed's decision Tuesday to lower its federal funds rate by 0.75 percentage point to 3.5 percent has been met with some skepticism, but it gave intrepid investors Wednesday a reason to buy the severely dented stocks in the financial sector.

"You might say this is a belated reaction to what the Fed did this week, compounded by hopes for the Fed to do more next week," Cardillo said. Traders who bet on the Fed's target fed funds rate were pricing in on Wednesday a 100 percent chance of a 0.50 percentage-point cut by the central bank when it meets next week.

Rate cuts will eventually boost margins for banks and other lenders, which have been working to lower costs and boost cash levels through layoffs and stock sales. Those companies - like Citigroup Inc., Washington Mutual Inc. and Merrill Lynch - were the big winners Wednesday.

Moreover, the billions of dollars in mortgage-related losses suffered by the financial companies contributed to months of selling on Wall Street.

"The early leaders in a market recovery tend to be banks, REITs (real estate investment trusts) and homebuilders, as these are the groups that typically would benefit first from a turnaround. And those have been the market leaders this week," Goldman said. "What has happened is the Fed is flooding the system with liquidity and eventually we should see some traction in the economy. And stocks tend to respond first."

The Dow Jones industrial average rose 298.98, or 2.50 percent, to 12,270.17.

Broader stock indicators also surged. The Standard & Poor's 500 index rose 28.10, or 2.14 percent, to 1,338.60, while the Nasdaq composite index rose 24.14, or 1.05 percent, to 2,316.41.

Meanwhile, Top House leaders and Treasury Secretary Henry Paulson Wednesday tallied the cost of measures to jolt the U.S. economy out of its slump as the three sought a swift bipartisan deal on a recovery package that could move through Congress within weeks.

The leader of the House of Representatives, Speaker Nancy Pelosi, a Democrat, and Minority Leader John Boehner, a Republican, are taking the lead in congressional negotiations, with the centerpiece of the measure expected to be a tax rebate similar to, but bigger than, the $300-$600 checks sent out in the summer of 2001. The two huddled for a lengthy meeting with Paulson, President George W. Bush's point man on the package, and planned another gathering this afternoon.

"We looked at a lot of different options," Boehner told reporters, adding that the threesome reached "no conclusions or agreements." He said it would "require a great leap of faith" from both parties to find common ground.

Senior lawmakers in both parties met on Tuesday with Mr. Bush, who has proposed a stimulus plan worth about $150 billion. Combined with Iraq war costs and decreasing corporate tax revenues because of the economic slump, a package that size would more than double last year's deficit spending of $163 billion, according to new congressional budget estimates.

Mr. Bush expressed optimism that his administration can reach quick agreement with Congress.

"I believe we can find common ground to get something done that's big enough, effective enough so that an economy that is inherently strong gets a boost - to make sure that this uncertainty doesn't translate into more economic woes for our workers and small business people," Mr. Bush said Tuesday.

Pelosi, Boehner and Paulson are working on hammering out details. Senate leaders Harry Reid, a Democrat, and Mitch McConnell, a Republican, have agreed to stand back and let the House take the lead in the talks with the administration.

In the Senate, Reid said in an interview, "There are too many cooks in the kitchen. Send something over to us and we'll try to move it as quickly as we can."

Perhaps the most important obstacle to overcome is differences of opinion over who should receive rebate checks. Potential disagreements between the president and Congress: Democrats want rebates for working Americans who don't pay income taxes and no benefits for high-income earners, reports CBS News senior White House correspondent Bill Plante.

Thus far, talks have focused on setting the parameters of a bill combining rebates with Republican-sought tax breaks for businesses, as well as Democratic-backed help for the unemployed and those on food stamps.

Talks continued as the nonpartisan Congressional Budget Office, citing the weakening economy, estimated that the budget deficit for the current year will jump to about $250 billion. That figure does not reflect at least $100 billion in likely additional red ink from the deficit-financed economic stimulus measure.

Senate Budget Committee Chairman Kent Conrad, a Democrat, said the 2008 deficit would reach more than $350 billion once the costs of the impending stimulus bill are factored in.

Both sides have seemed to negotiate in good faith. Republicans and Mr. Bush declined to insist on extending Bush's 2001 and 2003 tax cuts that expire in three years, while Democrats offered up tax breaks for business and limited their roster of spending proposals. Democrats also agreed to waive budget rules requiring tax increases to finance the measure.

[nwihoosier]

Peace and Love gkc99
Do something that helps someone today
Peace and Love

[pollroller1]

Yep, I feel so much better knowing that our president has things under control.

[sgtrds]

Bush will throw the poor and middle class a fish, just to try to justify the gourmet dinner he''s going to hand the rich in the form of massive tax cuts for them. The only real way to help this sick economy is to STOP THROWING AWAY LIVES AND MONEY ON THE WAR!!!!!!

[grumpas]

The proposed tax rebate has to be the most ignorant thing Bush has come up with to date! What''s he going to do borrow billions more from China to give us all a tax break?????? When all he would have to do is end a war, take a few tax breaks back from the rich and quit squandering. This creep needs to be gotten out of office NOW!

[sgtrds]

Trickle down economics, as practiced by Bush and Reagan before him, basically says that if you make the rich even more nauseatingly rich that sooner or later some of the wealth will slop over and leave some droppings on the floor for us peons to fight over. Bush will not approve of a rebate unless it includes a massive tax cut for investments, so he hasn''t changed his ways. Stuff the rich with more money and if they vomit some of it up the rest of us can share in the puke.

[shanev137]

Once again, treasonous Bush and his corrupt Fed acted to protect the Wall Street bankers at the expense of all Americans.

Every time the Fed lowers interest rates they do so by creating money. In other words, they create inflation. They are stealing from savers and anyone whose income is fixed or somehow tied to the CPI (and as everyone knows, the CPI does not accurately measure inflation - it''s the government''s way of cheating retirees).

[king77shaw]

WRITE YOUR OWN REBATE CHECK ! ...

1) CANCEL YOUR CABLE TV: let the corporate media moguls (and their advertisers) know that you will no longer pay for their propaganda ..

2) STOP INVESTING YOUR MONEY ON WALL ("WAR") STREET: corporate America is selling out the middle class to the lowest global bidder and using our own money to do it; the financial markets will push for anything that increases profits - especially war .. best to invest your money in land, real estate, gold and silver%u2026

3) SUPPORT LOCAL ECONOMIES !
- Buy from local manufacturers, local retailers, local craftspeople/artisans, etc;
- if possible, BURN WOOD for heat;
- support local growers or grow some of your own food;
- implement alternative energy sources (solar, hybrid autos etc ..)
- develop local means of commerce not based on the failing US dollar ..

4) STOP UNNECESSARY CONSUMPTION & STOP USING YOUR CREDIT CARD ! think twice about what you buy; is it absolutely necessary ? who does it ultimately support ?

5) DECENTRALIZE ! - the global economy is nothing more than a ploy to centralize power, control and wealth into the hands of an elite few - blinded by misinformation, the American people are buying right into it - the rich get richer and the middle class is quickly becoming the working poor ...

[sgtrds]

- if possible, BURN WOOD for heat;

Posted by king77shaw at 09:26 AM : Jan 23, 2008

Save fuel! Throw rich republicans in your fireplace and stove! Thanks to Bush there''s a huge number of them to spare!

[rukindr]

It seems to me as if no solution other than ending the war is going to be enough for people. How exactly can we end the war right now? I''m not being sarcastic, it''s a serious question, I don''t see the logistics of it. We''re on the brink of a severe recession (and yes, plenty of people are to blame for that) so any steps that can be taken should be welcome. I don''t approve of Bush, I never have and I will always believe he is certainly the worst president in my lifetime and I sincerely hope that the next president is able to give up all the power the executive office now has. That being said I do welcome anything that may help the situation and while this solution won''t cure the problem it MAY help.

[sgtrds]

It seems to me as if no solution other than ending the war is going to be enough for people. How exactly can we end the war right now? I''''m not being sarcastic, it''''s a serious question, I don''''t see the logistics of it.

Posted by rukindr at 09:32 AM : Jan 23, 2008

It''s actually quite easy. Command the Pentagon to come up with a plan for a phased withdrawal over the course of about 9-12 months and just do it. Just leave. Pull our troops out and station some of them in Kuwait for another year or so to tamp down any Al-Qaeda flare ups and let the Iraqis fight the rest out on their own.

Off to work. I have to earn some tax money so Bush won''t have to borrow to give me some of it back in his joke rebate.

Oh wait......too late for the........

[hankleikam]

You guys that are Bush Haters really need to lighten up. The hatred that I see by the dems is really un-healthy. The Democrates are in the majority and have the power why is everything someone elses fault. Take responsability for your own problems, if everyone worked and was not waiting for a handout we wouldnt be haveing this discussion. All you dems want to do is take money from someone else and give it to lazy people. That really drains our economey. So lighten up take your share of the work and leave my money alone!

[mcvet]

You guys that are Bush Haters really need to lighten up. The hatred that I see by the dems is really un-healthy. The Democrates are in the majority and have the power why is everything someone elses fault. Take responsability for your own problems, if everyone worked and was not waiting for a handout we wouldnt be haveing this discussion. All you dems want to do is take money from someone else and give it to lazy people. That really drains our economey. So lighten up take your share of the work and leave my money alone!


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Posted by hankleikam at 09:49 AM : Jan 23, 2008
+ report abuse

Don''t you people have ANY honor at all? This LOWER than LIFE piece of TRASH lied to us, spent 6 long years and a Trillion Dollars on a war that was based on NOTHING but LIES. He took an economy that was in GREAT shape, a balanced budget AND a Surplus and turned it into THIS. Now add that to what he and Rove did to the Democrat Party after 9/11, during the elections, during the 2004 elections and YEAH I hate the scum.. you''d better believe I hate him and his FASCIST party to the ends of this earth. Got it? Sieg Heil Bush!!

[hungry1968]

=====***UNCLE SAM WANTS YOU***=====

Posted by underdogus at 10:02 AM : Jan 23, 2008




Uncle Sam wants EVEN MORE MONEY for the industrial military complex.....

[gkc99]

Bushit ran up the national debt by some $4,000,000,000,000 with his credit card war and tax cuts for the billionaires.

Clinton shipped out technological, scientific and manufacturing competitiveness overseas to Asia with his H1B and offshoring giveaways, for money. There''s no reason to think Hillary is any different. In fact, she probably did most of Bill''s thinking while he was Prez.

Time for a change. Barack Obama.

[fettkonserv]

Everything is fine we can all go back to sleep. The Democrats are just trying to strike fear in our golf game.

[j62kd4b]

Don''t criticize the IMMIGRANTS FROM 1890 - 1940 - These GERMAN, PORTUGUESE, ITALIANS, FRENCH, had to have a TRADE and a SPONSOR to become a U.S. Citizen - my own Portuguese GRANDFATHER was a BOAT DESIGNER in Madeira, he was INVITED by a Newport News, VA Shipyard to come in 1904 to help REDESIGN THE U.S. NAVY BOATS BECAUSE THE UNITED STATES WAS GOING TO WAR IN GERMANY, where the DEEP PROW U.S.NAVY SHIPS COULD NOT GO IN THE SHALLOW GERMAN RIVERS! Yes,I said 1904 - the U.S. claims it wasn''t into the WWI, but what does this DATE tell you - You can''t believe any political PRESIDENT - Teddy Roosevelt REALLY WAS HOT TO HAVE THE SPANISH-AMERICAN WAR in 1898....It''s ALL BECOMING HOPELESS...Resign Bush/Cheney...Hopefully these 2008 candidates can IMPROVE THINGS, but.....

[micma-2009]

The deficit for the current budget year will jump to about $250 billion, the Congressional Budget Office estimated Wednesday, citing the weakening economy. And that figure does not reflect at least $100 billion in red ink from an economic stimulus measure in the works.


This years deficit will, at the very least, double last years deficit.

[raised4952]

once again history repeats its self,during the 1930 the usa was flooded with illegal imigrants from mexico during the great depression and our goverment still has not learned anything from history..

[watcher269-2009]

It''s OKAY America - Bush was an Economics Major at Yale - he''ll take care of us. He''s been Great the last 7 years so you can completely trust Bush and Cheney.

[element51]

hankleikam....I worked all my life and paid into the government all those years. I am now on social security and suffer from diabetes. I may soon have to have one of my legs removed. Yes, I am one of those lazy people you refer to. You want to do away with all social programs and just let everyone fend for themselves. How can you look at what bush has done to this country and make the claim that it is all the democrats fault? Are you blind and brain dead? Your man bush claims to be a "compassionate conservative" but in his case that is a contridiction in terms. He only has compassion for the rich because that''s all he has ever known. He has no concept of what it is like to have to do without. What really drains our economy is a senseless war and giving billions to the ultra rich. Give us a clear majority in the house and senate so the republicans cannot block everything we try to do and watch some of our problems get solved. Oh yes, when it''s time for you to draw social security be sure to tell them you don''t want it and send it to the republicans.

[element51]

otionwave....leafntrees it that you?

[marcodele]

Yes Watcher, Bush was an economic major at Yale because he was rejected by UT Austin law school. So his only option at the time he was drinking and snorting was to have Daddy get him into Daddy''s alma mater then scrape through on C minuses. Yes sir, he''s got our country in fine shape.

[sgtrds]

once again history repeats its self,during the 1930 the usa was flooded with illegal imigrants from mexico during the great depression and our goverment still has not learned anything from history..

Posted by raised4952 at 11:43 AM : Jan 23, 2008

The great depression was NOT caused by undocumented workers.

[underdogus]

world''s rich and powerful gather at Davos 2008 meeting..cnn reports.. hmm NEW WORLD ORDER???

[frankson2]

THIS COUNTRY IS "TAPPED-OUT.

[killtheliars]

I am not going to have any money taken out of my paycheck this year. If the economy is strong at the end of the year I will pay my taxes. If the ecomony by that time has fallen apart and I am struggling to keep up my current standard of living I just won''t pay my taxes.
I would advise others to do the same. If the government is not doing right by you don''t do right by the government. It is not what you can do for your country, it is what your country can do for you. If it is ok for corporate America to have this attitude it should be ok for the individual as well.

[underdogus]

soaring oil prices, the falling dollar,rising food prices, trade imbalances and a tide of protectionism have added to the broad economic woes linked to the slowing the U.S. economy,and potentially the rest of the world..

[easeup-2009]

"Mortimer your brother''s not well."

[micma-2009]

All Americans will soon have to face a bitter and now obvious truth: Our national, political and economic leaders have squandered this nation''s wealth, and the price of this profligacy is enormous, and the bill has just come due for all of us.

[romeaux]

Advisors have been telling the world for months now that this was going to happen. You can''t continue to drive up stock and real estate prices to ridiculous heights forever without expecting them to ever come crashing back down..when the Dow hits 10,000 then we''ll talk about being ready for a recovery.

[jennasmith2]

I''m taking my money out of the bank & stock market and buying gold and silver.
I can''t trust greedy thieves who are running this country into the ground from their boardrooms and big fancy offices in DC !!!!

[buddhabman]

Hey Republican Conservatives. So what about your Economic Philosophy now. You wanna stay true to your do nothing cause and just let the economy ride. Republican Conservative Philosophy is pathetic and soon to be dead. Why do we even consider voting for you. You have no Education, Health Care or Social plan, no Economic plan and obviously now no Military or Defense plans. Bring us the Libertarians or another independent party to replace the worthless GOP.

[mapjo]

SELL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[easeup-2009]

"TURN THOSE MACHINES BACK ON!!!"

[dogband]

Just a possibility .... would it be nice to have the wasted billions of dollars sitting in our treasury that have been wasted on this useless, unnecessary war right now?

This pales in comparison to the question, asking if the families that have lost loved ones would like to have them back.

This entire administration has been the cluster tuck of our entire countries history.

What an absolute mess.

The only ones that have profited in any form for the last eight years are wealthy weapons producers, wealthy big business, wealhty oil men, and wealthy ________.

And still stupid poor and middle class people follow the scum republicans to their grave, thinking that this the party that will "protect" them, and the "family values" party.

Holy ***.

The biggest fleecing in the history of the world.

[jennasmith2]

I feel like I just woke up and my rear-end hurts for some inexplicable reason???!!!!!

[buddhabman]

I am certainly fortunate to have a good 25 more years to work and save. Maybe more like 35 now.

[buddhabman]

Are your hands up? Weee!

[killtheliars]

before you go and buy gold you need to know the government can take it from you.After the US government confiscated its own citizens'' gold in the early 1930''s, it offered to buy gold from the rest of the world at a substantial premium to the market price at the time. In a very short period, the US government became the largest gold owner in the world. In addition, the US government promised to redeem its paper dollars for gold upon request. Because the US government owned the most gold, it made the rules from then on.Up until 1971, foreign governments could convert their dollars, mostly held as a reserve currency, into physical gold. But in 1971 President Nixon, realizing that the rate of dollar redemptions would deplete the US''s gold reserves, reneged on the convertibility of the dollar and the dollar became just another fiat currency. Unfortunately it was too late for the rest of the world. The US dollar was already the most widely held reserve currency and there was no substitute reserve asset that was backed by gold, except gold itself.


But for the governments of the world to return to the gold standard, which is what they should have done, would be to admit the fraud inherent in fiat currencies. This was politically less palatable than to continue using the US dollar as a reserve currency and take a chance on the US government. This mistake will continue to haunt all governments until the world returns to the gold standard.

[watcher269-2009]

Come''on Mr President - Prove to all these non-believers that you can fix the economy, - again - just like when you took office.

You can do it!

Show these Liberal Media Whiners what you can do!

[joyous88]

welcome to the conservative republican evangelical version of an economy,

all for the wealthy nothing for you and me

[slim1h2o]

You can do it!

Show these Liberal Media Whiners what you can do!

Posted by watcher269 at 01:15 PM : Jan 23, 2008

ROTFLMAO! Is that the new Rebulican Prayer?

[walt1944-2009]

The Great Depression is COMING!!!!

The Great Emperor Bush II''s legacy will be the first leader since Herbert Hoover (another Republican!) to push us over the brink, then run for cover! Why do you think the Great Emperor has been doing so much traveling lately. He wants to see what country will give him sancturary when everyone will be screaming for his hide!

Jimmy Carter - 4 years - Recession, high inflation
Ronald Regan - 8 Years - Recession 1982
George HW Bush - 4 years - Major Recession 1992
Bill Clinton - 8 Years - Cleaned up Bush Recession 1993
George W Bush - 7 Years -Recession 2002
Recession 2007 (possible DEPRESSION)

History speaks for itself!

SIG HEIL, BUSH!!!!

[mcvet]

ROTFLMAO! Is that the new Rebulican Prayer?



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Posted by slim1h2o at 01:19 PM : Jan 23, 2008
+ report abuse

LOL Why not? It''s the ONLY thing these simple minded Bootlickers know isn''t it. If you can''t blame Clinton then blame "liberals". ROFLMAO The problem is I have yet to get one of these Nazi''s to tell us exactly who the "liberal''s" are. I mean I know what the Reich dreamed it up for, the Communist box they used to put anyone who didn''t agree with didn''t have the punch they needed for the simple minded out there. I just do not understand how anyone can be that stupid. Sieg Heil Bush!!

[buddhabman]

Are your hands up? Weee!

[noloyalisti]

The worst thing we can do now is to spend. If the government gives out money (I am sure the conservatives will refuse it because they don''t want to be known as welfare queens or kings), save it for the even worse times ahead. We should not reward corporate America with even more money. They are bad citizens, dare I say traitors?

We should have been saving all along instead of abandoning common sense and listening to big war profiteering corporate America. My mother taught be to buy when I had the money or else do without. Now we can all learn the hard way.

[mcvet]

Have you ever wondered what it was like to be on a sinking ship with and INCOMPETENT Captain? Welcome Aboard America!! Sieg Heil Bush

[slim1h2o]

I just do not understand how anyone can be that stupid. Sieg Heil Bush!

Posted by MCVet at 01:22 PM : Jan 23, 2008

Me neither,,but they seem to do it, on a, almost daily basis. Their silence would have been deafening, except their ignorance, has been even louder.

[slim1h2o]

Posted by MCVet at 01:29 PM : Jan 23, 2008

You mean the Titantic, where all the officsers abanded ship? Leaving passengers to fend for themselves?

Is that the one?? At least, thats how I feel right now. LOL

[ov442]

TrickleDown Poooopenomics is the GOP way. They poooop&it trickles down like molasses.

The only ones being harmed by an economic downturn are as usual the poor and middle classes. The wealthy are just having a bump in the road on their way to empire building.
The stimulous package should point directly at those suffering the most and small businesses in need of strengthening.
The fact that Bush wants to leave out the poorest Americans from receiving aid, just propagates his Historical Image as an evil scumbag Antichristian Despot.